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What is financial planning?
In this post we'll discuss;
- The importance of financial planning
- What is financial planning all about
- The process of financial planning
Financial planning is important because it helps us map out our financial future, through the process of financial planning we can identify where we are currently standing, once we understand that, we can set some goals to get where we want to go. Simply put, financial planning is looking at our current financial position and seeing where we want to go. Once we've done that making the plan to accomplish our financial goals would be a walk in the park.
The first step in the financial planning process is evaluating our current financial situation, we then look at where we want to go financially (financial goal setting), once we have taken these steps, we then take actions to accomplish the goals that we've laid out, we then need to monitor our progress and our goals. From time to time we need to re-evaluate our goals to make sure that they still fit in our current life and circumstances. Life changes from time to time and it's just fine to adjust our goals and priorities as those changes occur.
The first step of the process is; evaluation of our current situation, this means looking at all areas of our financial life. We need to look at; how much we currently have or how much we're currently worth, our protection or insurance- how much life insurance do we have, how are we covered if we get hurt and can't work. Long term goals are things that we're saving for on a regular basis to use in the future. Two major long term goals are paying for future education and funding our retirement. Our savings are goals that are more short term, this maybe evaluating our emergency funds or saving for a home.
Setting some financial goals is the next step in the process.
We need to spend sometime thinking where we want to go financially.
Decide where you want to go
- When do you want to retire?
- What do want your financial status to be?
- etc...
For instance we need to spend sometime thinking about when, we're going to retire and how much money we'll need to live the lifestyle that we want. Even though no one wants to think about passing away, we need to be prepared with a plan of action for when it happens. We need to spend sometime quality time figuring out what is right for us.
Once we have identified where we want to go, we need to take action to start working towards this goals. We basically need to fill the gap between what we're currently doing and what we want to do. For example; we may need to purchase some life insurance to protect our family, if something were to happen. We may need to set aside an amount of money each month to help meet our retirement goals.
Once we've set our actions knto motion, we need to monitor our plan. This begins by tracking what we are currently doing - are we meeting our current goals- we need to re-evaluate those goals. Over time life changes and with these changes we need to make sure that we are still moving in the right direction. We may find that we need to readjust some of those financial goals, we then may begin tracking our process again towards those new goals.
In summary, we discussed that financial planning is a process, we need to evaluate our current financial situation, set some financial goals and take action, to begin meeting these goals, Finally we should consistently monitor our progress toward our specific financial goal
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Sustain the Steem Blockchain!
Imbibe in them the discipline of handling funds!
This is a masterpiece in the aspect of financial planning. Simple straight to the point motivation and guide to financial planning. Thumbs up @bankonsteemit.
Excellent post sir. I really learnt alot from the post @bankonsteemit.
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A very vital post. Useful information here. One just have to be financially well.
Nice post, the most important thing in a human life is planning , and for you to be able to achieve your goals in life is for you to have effective planning. Even when you set out your plans make sure you achieve them . faith without works is death.
This is indeed lovely.
Financial planning is all that we need.
If Steemit has the potential of annihilating poverty globally in 2018, then financial management cannot be sidelined